India approves insurance overhaul
Rickshaws
Just 20% of the Indian population is insured

The Indian government has approved a new bill that paves the way for foreign investors to take much larger stakes in domestic insurance companies.

The bill proposes raising the limit for foreign direct investment from its current level of 26% to 49%.

Multinational insurers would then be free to move into a market where just 20% of the 1bn population is insured.

The bill goes before parliament in December, but is unlikely to be passed before elections due in early 2009.

The government also hopes that easing foreign ownership limits will attract much-needed investment, after a year in which foreign investors have pulled out more than $12bn (£7.4bn) from Indian markets.

Waiting game

The government raised the limit for foreign ownership to its current level of 26% in March 2000 and has been keen to increase the limit ever since.

Until now, it has been thwarted in its efforts to do so by communist partners, who withdrew their support for the government in July this year.

Multinational insurers would be keen to move in to the rapidly developing Indian market, where almost nine out of 10 workers do not contribute to pension schemes.